Friday Funds: UK pension funds invest in LGIM and Gresham House strategies

The latest developments in ESG-related funds

The London Borough of Newham pension fund has invested £520m into a new climate fund from Legal & General Investment Management (LGIM). The ESG Paris Aligned World Equity index fund, which also secured £100m from LGIM’s alternative asset platform Legal & General Capital, uses the EU’s Paris Aligned Benchmarks methodology and tracks the Solactive L&G Developed Markets Paris Aligned ESG SDG Index. 

Fellow UK local government pension funds in Worcestershire and Teesside are among those to have participated in the latest fundraising round for Gresham House’s second British Sustainable Infrastructure Fund. The fund secured £100m at first close, and is targeting £500m. It will invest in sustainable infrastructure across six sub-sectors: digital inclusion, resource efficiency, waste solutions, regeneration, decarbonisation and health and education. It targets an annual net return of 8-10%, including a target yield of 5% per annum.

Gresham House also announced the acquisition of the Venture Capital Trust business of Mobeus Equity Partners in the UK, for an initial consideration of £24m. It plans to fund the deal through a £40m share offering, which will also finance battery storage and solar projects.

Quintet has announced a €200m investment in Amundi’s emerging markets green bond fund. The fund, launched in 2020, invests in hard-currency corporate and sovereign green bonds in emerging markets. The investment from Quintet will almost double its AUM to €450m. Meanwhile, Schroders and BlueOrchard’s emerging markets climate bond fund has attracted $100m in the three months since its launch. The pair did not name the investors. 

Jo Bamford, heir to the JCB construction equipment fortune, has partnered with family office Vedra Partners to launch a hydrogen investment fund. The HYCAP fund is targeting a raise of £1bn, and has already received £200m in commitments in the first round of funding. It will mostly invest in British hydrogen firms, aiming to accelerate green hydrogen production and supply, with 40 firms already identified for possible investment.

Monega Kapitalanlagegesellschaft, DWPT Deutsche Wertpapiertreuhand and Soehnholz Asset Management have partnered to launch the FutureVest Equity Sustainable Development Goals Fund, investing in top performing ESG stocks that contribute to the achievement of the UN SDGs – in particular health, renewables and infrastructure.

Fidelity International has launched a Sustainable Climate Solutions Fund, investing in sectors such as electric vehicles, industrial automation, green hydrogen and renewable energy.

Tabula and Haitong International Asset Management have teamed up to launch what they claim is Europe’s first Asia ex-Japan exchange-traded fund for high yield corporate bonds. The fund, which has a total expense ratio of 0.6%, tracks the iBoxx MSCI ESG USD Asia ex-Japan High Yield Capped index, which focuses on benchmark bonds. It overweights issuers with higher ESG ratings and excludes those involved in controversial activities.